Taking Investment in Education Seriously: Credible Economic Returns to Higher Education
Measuring the economic returns to higher education has become crucial as advanced skills have become more important to economic growth. Measuring these returns is difficult owing to:
(i) selection on aptitude into different institutions;
(ii) multiple outcomes;
(iii) the attribution problem that occurs when a person attends a few institutions in sequence;
(iv) computing the longitudinal cost to society of a person's education.
In this lecture, I explore what we learn from credible estimates of the returns to higher education and argue that single-crossing—higher aptitude people earning a greater return to any marginal increase in educational resources—is the central implication of the evidence. This sets up a serious policy problem for earlier education.
Photo: Courtesy of the Hoover Institution of Stanford University